''Smart enough? NATO’s response to the fiscal crisis''

Thank you for that introduction. It is a pleasure to be back in Bratislava, and to be participating in the GLOBSEC conference after a three-year absence.

I first visited this city – and the High Tatras mountains – in 1973, as a member of a group of college students en route to the Soviet Union to improve our Russian language skills. I was struck by the beauty of this country and the hospitality of its people. But it was a somber time, just five years after the Soviet occupation of Czechoslovakia, and it was hard to imagine what changes lay in store for the nation and the region.

Since then, we have seen Slovakia’s potential fulfilled. It has become a vibrant democracy, a member of the European Union and NATO, and an economic success story. And it has also become an important provider of security. Today, Slovakia has nearly 330 troops in Afghanistan, a sizeable contribution for a small nation. And it has made many important contributions to other NATO operations as well, especially in the Balkans.

Today, we face one of the most challenging periods in NATO’s history. And it is good to have Slovakia as part of the team as we come to terms with those challenges. At our NATO Summit in Lisbon a year and a half ago, we approved a new Strategic Concept to guide us through this decade. At our Summit in Chicago next month, we will take the necessary decisions to ensure that we emerge from this decade as a stronger and more flexible Alliance, and that we prevent the current fiscal crisis from turning into a long-term security crisis.

When we adopted our new Strategic Concept in Lisbon, nobody could predict that – just a few months later – NATO would be enforcing a naval arms embargo, enforcing a no-fly zone, and protecting civilians in Libya. By the year 2020, the world may not be any more dangerous than it is now, but it is likely to remain highly unpredictable. And this means that we will still need an effective NATO – as a hedge against future threats, and as a means for shaping the security environment in support of our common values and shared interests.

By 2020, the strength of the Alliance will continue to come from the ability of its member nations to work together – to deal with crises that threaten Alliance security, wherever in the world they may arise; to put together complex joint operations, at short notice, with high impact and high precision; and to have the right mix of capabilities on hand to respond to different scenarios.

Our operational experience shows where we must do better. In Libya last year, European nations and Canada took the lead and provided the majority of air and maritime assets. In this respect, one could say that this was the first European-led combat operation in NATO’s history. But the ultimate success of the mission depended on capabilities that only the United States could offer – especially air-to-air refueling, drones, surveillance and intelligence assets.

To be able to deal with the unpredictable, and to continue guaranteeing the security of each of our member nations, we need to have those capabilities available more widely across the Alliance – and especially here in Europe. In the current economic climate, that is a major challenge. The best way forward is “Smart Defence”.

“Smart Defence” is a new way of thinking about generating the defence capabilities we need for the year 2020 and beyond. It is about deciding how to manage what we have to cut, but also staying focused on what we need to keep, so that we can meet the Alliance's strategic goals now and in the future. It is about Allies working together to deliver capabilities multinationally that would be too expensive for many of them to deliver alone, ensuring that we all get the maximum return on available defence budgets. And it is also about Allies coordinating their plans more closely than they do now so that they can specialise in what they do best, and focus their resources in those areas.

“Smart Defence” will be high on our Chicago Summit agenda, and it is a project that will take years to fully implement. But we are already seeing the benefits today. We are bringing together national contributions to build an integrated NATO-wide missile defence system to protect our European territory and populations from a growing threat. We are developing a NATO-owned and operated Alliance Ground Surveillance system, to provide our military commanders with a full picture of what is happening on the ground in future operations. (Let me use this opportunity to commend Slovakia, as one of the 13 nations acquiring AGS, for its continued support to this key program.)

But acquiring the right capabilities is not enough. We must also make sure that these capabilities, and our forces, can work with each other effectively. This is especially important as we prepare to draw down our combat operation in Afghanistan by the end of 2014. After that, Allied and Partner forces will no longer be operating shoulder-to-shoulder on such a large scale as they have for the past decade. We must not lose the vital skills they have gained, but build on them to strengthen our interoperability, our effectiveness and our credibility.

We can strengthen our ability to work together and, when necessary, to fight together, through expanded education and training; more exercises -- especially with the NATO Response Force; and the better use of existing equipment and technology. That is the thrust of the Connected Forces Initiative which the Secretary General launched earlier this year, and that should receive formal approval at Chicago as well.

All these efforts to enhance our capabilities would benefit if we managed to give more teeth to our NATO Defence Planning Process. And here I am talking not so much about the mechanics of the process. Rather, the challenge is how can we use it more effectively to achieve the necessary political “buy-in” that ensures that all Allies live up to the responsibilities they have accepted as members of NATO. This means each nation spending its scarce resources on what NATO really needs, rather than on what is most popular at home; it means setting priorities collectively, avoiding duplication, and promoting a sensible division of responsibility so that the Alliance has the full array of forces needed in the year 2020 and beyond. To get there, we will need more sustained, senior-level political engagement by capitals in capability development across our Alliance to the benefit of all.

It is also clear that, to get more value from the resources we invest in defence, we need greater openness in our defence markets. We all understand the sovereignty concerns involved. But the fact remains that the removal of unnecessary export controls would go a long way toward boosting capabilities, lowering costs, and facilitating more multinational projects.

Finally, we must press on with the work to streamline NATO’s own structures. At Lisbon, we agreed on a new, more agile NATO command structure, and we must complete the implementation of that structure without delay. In addition, reorganised NATO agencies, and a leaner staff structure at our headquarters in Brussels, will also help to enhance the effectiveness and efficiency of our Alliance.

It is sometimes said that one should never waste a good crisis. I certainly feel that the current fiscal crisis is a good opportunity to change the way we do business in NATO. And I have indicated a number of areas where I believe change is necessary, and achievable – if we’re smart.

Our Chicago Summit should mark clear progress on the capability front – with key capabilities being available more widely on both sides of the Atlantic. But it should also mark progress towards an Alliance that is rebalanced in another, even more fundamental way – an Alliance in which North America and Europe share leadership in contributing to global security in a globalised world.

Capabilities are one vital aspect to backing up that shared leadership. So too is the preparedness to participate in joint missions and operations. But there is one other, vital aspect: Europe must resist the temptation to use the fiscal crisis as an excuse to turn inward. Rather, Europe must continue to join with North America in engaging other nations and organisations in building peace and security.

That of course applies to this continent, where we need to work together to complete Europe’s unfinished business – especially consolidating stability in the Western Balkans, resolving the frozen conflicts, encouraging Ukraine and other East European neighbors to choose the path of Euro-Atlantic integration, and bringing aspiring members into the NATO family as soon as they are ready.

But it also means reaching out to other interested countries, wherever they may be located on the globe, that want to partner with the transatlantic community in addressing common security challenges – countries in the Middle East, North Africa, and the Asia-Pacific region.

And it should, very clearly, include a true strategic partnership with a country that is close to my heart – Russia. I hope that we – and Russia – are finally smart enough to forge such a partnership, to include finding a “win-win” solution to the issue of cooperative missile defence.

Ladies and Gentlemen,

NATO has an impressive record of success that stretches back well over six decades. Throughout this period, our Alliance has always been very smart in adapting to changing circumstances – literally reinventing itself after the Cold War and emerging stronger than before in the face of every new challenge and opportunity we have faced over the last 20-plus years.

Our next Summit in Chicago will be a unique opportunity to demonstrate that we are equally smart in dealing with the current fiscal crisis. And that we are capable of changing the way we do business when it comes to defence capability development, so that our Alliance will be even stronger by the end of this decade than it is today.